A health insurance startup that was one of Governor Charlie Baker’s favorites in his venture capital days will pull out of two markets after losing money under Obamacare.
Oscar Insurance Corp., a private company that counts Fidelity Investments among its stakeholders, on Tuesday said it will withdraw from exchanges that offer individual health plans in Dallas and New Jersey next year.
New York-based Oscar has a simple online approach to buying insurance that Baker once called “gorgeous.” Baker was an adviser and served on the company’s board while an executive at the Cambridge venture capital firm General Catalyst Partners before he was elected governor.
In a blog post, Oscar chief executive Mario Schlosser said the four-year-old company would continue to sell insurance in New York City, San Antonio, Los Angeles, and Orange County, Calif. In January, the company plans to expand into San Francisco, he said.
Oscar has become a darling not only of Baker, a health care policy wonk who used to run Harvard Pilgrim Health Care, but of numerous investment firms. Boston-based Fidelity in February led a $400 million round of funding that raised the company’s valuation to $2.7 billion.
The company was co-founded by Joshua Kushner of Thrive Capital. He is the brother of Jared Kushner, son-in-law of Donald Trump, the Republican nominee for president who has threatened to dismantle Obamacare. Baker has not been involved with the company for some time, according to his spokesman, Tim Buckley.
Oscar is not yet profitable. It lost $105 million last year, a spokesman confirmed. It is the latest insurer to say it will exit some health care exchanges due to losses resulting from the Affordable Care Act. UnitedHealth Group Inc. and Aetna Inc. both have announced plans to scale back the number of states where they participate.
Joel Cutler, managing director at General Catalyst, said it’s not surprising that companies are reevaluating their place in certain health exchanges. He still sees opportunity for companies like Oscar.
“I just really believe great technology that’s created with consumers in mind’’ and integrated with health care providers “is crucial for the success of keeping the costs contained,” Cutler said.
Bloomberg News first reported on the Oscar blog post Tuesday. The company insures 130,000 individuals.
A spokeswoman for Baker declined to comment on Oscar’s announcement. The governor has defended the Massachusetts health insurance marketplace, saying, “while there is still more work to be done to increase accessibility and transparency for consumers, we have taken many steps in the right direction.”